Incentive Testing for Fun and Profit

MarketingExperiments just published two fascinating case studies on the use of incentives to drive email capture and free trial conversion.

Incentives have a mixed history in the annals of interactive marketing. The truth is, they work. And, as MarketingExperiments shows, when they are optimized they work really well. But they have been abused by some marketers and, if used poorly, can actually degrade performance.

That said, you gotta read this report now. It’s really fascinating.

In the first study MarketingExperiments tested a sweepstakes prize intended to drive email sign ups. The tested incentives were a wireless keyboard and mouse or an MP3 player. Given the prevalence of MP3 players as gifts all over the place – online and off – you might guess that would be the better incentive. If you thought so, you guessed wrong. The keyboard and mouse outperformed by a whopping 319%.

The second study tested incentives for a free trial offer from a financial services company. The choices were the New York Times bestseller Freakonomics, a free investment research kit or both. You might guess that both would be a can’t-miss combination. Again, you’d be wrong. The free book outperformed the research kit by 81%, and outperformed the combined incentives by 58%. Our only caveat on this experiment is that we’d want to see the marketer carry the data forward to full sales conversion. What you might find is that the book was popular and thus drove a lot of free sign ups from unqualified prospects, but that the investment kit drove a higher sales conversion rate. Again, continuing to test would ultimately yield the ideal incentive that would drive a higher number of free trials AND convert them at a higher rate.

The big takeaway, and you won’t be surprised to hear us say this, is that you must, must, must test. As my colleague Stephanie Miller wrote on this blog, even super-smart marketers can’t guess their way to better results.

When we work with clients on acquisition campaigns we highly encourage them to dedicate a portion of their budget to testing. But many are reluctant. When you have a limited amount to spend you don’t want to “waste” it on campaigns that might not work. But that is the wrong way to think about it. By increasing your response rates you increase your ROI and make the non-test portion of your budget work harder. More importantly, you gain valuable insights that can increase results exponentially over time.

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